1994 P T D (Trib.) 535

[Income-tax Appellate Tribunal Pakistan]

Before Nasim Sabir Syed Accountant Member and Muhammad Mujibullah

Siddiqui Judicial Member

I.TA s. Nos. 1714/HQ of 1989-90, 507/HQ and 678/HQ of 1990-91, decided on 21/11/1992.

Per Nasim Sabir Syed, Accountant Member--

(a) Income Tax Ordinance (XXXIX of 1979)---

----S. 13---Deemed income---Purport of S. 13---Power of Assessing Officer to make addition---Conditions---"Genuine contract" and "genuine consideration"- Concept ---Where the assessee had not shown the correct price for which the property was purchased, Income Tax Officer, before making any addition in that behalf was not only to get prior approval of the Inspecting Assistant Commissioner but also give an opportunity to assessee ` to explain the investment---Addition under S. 13 was envisaged only if no satisfactory explanation was given---Value of such property could, however, be taken lower than the value fixed by the District Authorities under S. 13(2), where there were certain disadvantages or encumbrances attached thereto:

The provisions of section 13 of Income Tax Ordinance have been specifically introduced by the Legislature to safeguard the interest of Revenue in case of unexplained investment. The provision of the section specifically gives the power to the I.T.O. that if the explanation given by the assessee is not satisfactory in the opinion of the I.T.O. the amount invested and not explained properly has to be taken as to be deemed income of the assessee. In this regard provisions of section 13(2) have to be read very carefully wherein it has been provided that if the investment made as shown by the assessee is too low, the I.T.O. can determine, after giving reasonable opportunity to the assessee of being heard and with the prior approval of the IA.C., a reasonable value and the difference between this reasonable value and the amount declared as invested has to be assessed as deemed income under subsection (1) of section 13. So, the conditionality laid down for any addition to be made under section 13(2) read with section_13(1) are:---

(1) The value of investment declared is too low.

(2) If the I.T.O. thinks that the value declared is too low then he gets the approval of the IA.C. before confronting the assessee. This has been deliberately made mandatory to ensure that no high handedness is involved as far as I.T.O. is concerned; and

(3) The explanation given by the assessee is not satisfactory.

This is a specific provision and under the present existing Constitutional set up it has to be applied and interpreted according to the principles of interpretation of statutes. Even if it is claimed that this provision is in contravention of the Islamic Jurisprudence concepts Income Tax Appellate Tribunal is not competent to give any finding on that issue. As far as the Income Tax Appellate Tribunal is concerned it has to interpret the provision of a given section in Income Tax Ordinance as laid down in that provision particularly when there is no confusion about them and the words used are very clear. In the present case the assessee had definitely shown the investment at too low a figure as compared to the value determined for the purposes of imposition of stamp duty. In the presence of this wide discrepancy between the value shown and the value adopted for stamp duty purposes, opinion held by the I.T.O. that it was too low is amply justified and he could take resort to provision of section 13(2) read with section 13(1) of the Income Tax Ordinance. It was contended by the assessee that declared value should have been accepted because the department had raised no questions in its case of the seller. Additions for unexplained investment as envisaged under section 13(1)(d) are applicable to purchasers. None of the provisions of section 13 is applicable to a seller. So, there was no question of any enquiries to be made from the seller about the. reasonableness of the sale price declared as far as the proceedings in the case of the seller under Income Tax Ordinance are concerned. At the most a competent Wealth Tax Officer is expected to keep this aspect of the matter in view when passing wealth tax order, if any, in case of the matter of fact a more rational approach in such cases is to consider the value fixed by the District Authorities an a particular date and take the escalated or de-escalated value of the property keeping in view the fact whether the prices of real estate were rising during the intervening period or falling. Simultaneously special features of the property have also to be kept in view. In the present case the I.T.O. had adopted the value determined by the District Authorities whereas the C.I.T.(A) had reduced it keeping in view the peculiar feature of the property in question. This peculiar feature was that it is a very old building with old tenants some of which were in litigation with the previous owners and were still in litigation with the assessee. In the case of the property with such attached disadvantages, the value at which it can be purchased can be lower than the value fixed by the District Authorities. This fact has been kept in mind by the C.I.T.(A) when giving relief. The approach of the C.I.T.(A) was very realistic and in accordance with the spirit of section 13(2). As far as the value adopted by the C.I.T.(A) was concerned the D.R. was of the view that the relief granted was not justified and if at all justified the same was rather on the higher side. The lower value can be taken under section 13(2) than the value fixed by the District Authorities when there are certain disadvantages or encumbrances attached to the properties. So, the claim of the D.R. that the value adopted by the District Authorities be restored was liable to be rejected. The relief given by the C.I.T.(A) was amply justified and called for no interference.

Quite a few people were not showing the correct prices for which the properties were purchased. The provisions of section 13 of the Income Tax Ordinance were deliberately introduced to bring into tax net the unexplained investment but it did not debar the I.T.O. from accepting the declared value if there was a "genuine contract" and a "genuine consideration" has been paid for same. This is why conditional ties were attached to application of section 13(2) that before making any such addition the I.T.O. is not only to get prior approval of the I.A.C. but also give an opportunity to assessee to explain the investment. Addition under section 13 is envisaged only if no satisfactory explanation is given.

(b) Income Tax Ordinance (XXXIX of 1979)---

----S. 62---Rejection of accounts---Assessee engaged in import of building hardware---Sales shown by the assessee were not verifiable; stock tallies were not available; no stock register had been maintained and gross profit rate declared was on the lower side---Held, absence of stock register and stock tally meant that the goods purchased could not be co-related with goods gold-- Dandekar formula, in such circumstances, could not be applied---Trading account results thus were rightly rejected in circumstances.

(c) Income Tax Ordinance (XXXIX of 1979)---

----Ss. 111 & 13(1)(d)---C.B.R. Circular No. (1) DT-14/91, dated 28-4-1991-- Penalty---Concealment of income---Determination of value of property by Assessing Officer ---Assessee had shown the value of property lower than the value determined for the purposes of stamp duty by the District Authority-- Assessing Officer relied on the values fixed by District Authorities thus based his figures which had been prepared by an Authority having specified knowledge about the transactions involved, in the case of real estate---Assessing Officer, therefore, had made addition on said basis which was justified---When the addition made was based on figures calculated under S. 27-A, Stamp Act, 1899 by the District Authority and such duty had been paid, then penalty for concealment had to be imposed.

Per Muhammad Mujibullah Siddiqui, Judicial Member--

(d) Income Tax Ordinance (XXXIX of 1979)---

----S. 13---Stamp Act (II of 1899), Ss. 27-A [as inserted by Sindh Finance Act (III of 1986)] & 27---Valuation of property by Assessing Officer while determining the value of investment made by assessee---Whether the value calculated by Collector under S. 27-A, Stamp Act, 1899 could be made basis for the valuation of a property while determining the value. of investment made by an assessee under S. 13 of the Income Tax Ordinance,1979.

C.I.T. v Siemen A.G. 1991 PTD 488 distinguished.

(e) Income Tax Ordinance (XXXIX of 1979)---

----S 13---Valuation of property by Assessing Officer while determining the value of investment made by assessee---Income Tax Authorities were not prevented by any injunction of Islam from ascertaining the correct and true valuation of the property for the purpose of taxation and without frustrating the contract between the parties---Principles of Islamic Jurisprudence on the subject discussed.

C.I.T. v. Siemen A.G. 1991 PTD 488 distinguished.

Sirajul Haque for the Assessee.

Israr Raouf, D.R. for the Department.

Date of hearing: 21st November, 1992.

ORDER

NASIM SABIR SYED (ACCOUNTANT MEMBER).---The assessee is a registered firm engaged in the import of building hardware. Cross-appeals have been filed for the assessment year 1988-89 against order passed under section 62 by the assessing officer. There is another appeal for the same year against imposition of penalty for concealment of income. This means there are three appeals to be disposed of for a single year i.e. 1988-89.

2. Major controversy about order passed under section 62 is against addition under section 13(1)(d) of the Income Tax Ordinance at Rs.19,97,600 which has been reduced by the learned C.I.T.(A) to Rs.11,78,000. The relevant facts about this addition are that it was found by the I.T.O. that as on 30-6-1988 the assessee had shown total value of building No. M.R./1/64 at Rs.9,66,900 for the first time. During the proceedings it was noted by the Assessing Officer that according to the Conveyance Deed for the sale of this property it was purchased for a consideration of Rs.7,00,000. This conveyance deed is registered with the Sub-Registrar `E' Division-I, Karachi at registration No.3016. According to the concluding paragraph of the conveyance deed the total built up area of the building is 11,540 sq Ft. First floor, second floor, third floor each have a total covered area of 11,140 sq Ft. Whereas 4th and. 5th floors have covered areas of 200 sq Ft.. each. Thus, the total covered area of the building was 11540 Sq Ft. valued at Rs.29,64,500 for the purpose of Stamp Duty which was paid at Rs.2,37,200. From this according to the I.T.O. it was evident that total value of the property was determined at Rs.29,64,500 by Sub Registrar for the purpose of Stamp Duty. The assessee was confronted through a show-cause notice on the basis of this tangible proof at hand with regard to the under-valuation of the value of the building to the extend of Rs.19,97,600. The reply was received by the I.T.O. mainly contending that the value determined for stamp duty purposes could not be made the basis for evaluating the property for income tax purposes and the I.T.O. should accept the value declared as per the conveyance deed being the contracted value as a consideration for transfer of property to be purchased. The I.T.O. did not accept this explanation and made an addition of Rs.19,92,600 under section 13(1)(d) which is under dispute.

3. The learned A.R. of the assessee once again took the plea before us quite emphatically the value as per conveyance deed should have been accepted because it represented a contracted value for the transfer of property between good Muslims. To support this contention reference was made to 1991 PTD 488 (Supreme Court of Pakistan) wherein it had been laid down that:---

"Income Tax Authorities cannot change the nature of the contract intended by the parties thereto, under the pretext that the rule of the interpretation of a fiscal law in this behalf is different (page 493):"

It was further observed when discussing Islamic jurisprudence that:---

As far as contracts are concerned there is prohibition against third party intervention in mutual contract. People be left alone in their mutually agreed transaction, so that they be blessed by Allah through free circulation of wealth amongst themselves.

It was further elaborated that:---

When parties by mutual free consent enter into a valid contract, then the third party would have no right to intervene either to frustrate the contract or to change its nature (page 493).

Taking up the principles of interpretation of statutes it was laid down that:---'

In case of fiscal statutes Courts are bound to apply Islamic Rules of Interpretation, unless excluded otherwise in preference to the contrary. So-called accepted rules of interpretation under the other jurisprudential concepts and the fiscal laws were no exception in that behalf.

It was also made clear that:---

"On the touchstone of Islamic Rules of Interpretation, which unless excluded otherwise, under the present Constitutional set up the Courts are bound to apply in preference to the contrary so-called accepted rules of interpretation under the other jurisprudential concepts (and the fiscal laws are no exceptional in this behalf): "

4. The learned A.R. was very emphatic in maintaining that in the light of the finding of the Supreme Court of Pakistan the declared values should have been accepted as it was the contracted value and Income Tax Authorities cannot change the nature of contract intended by the parties under the pretext that the rule of interpretation of a fiscal law in this behalf is different. We will like to clarify that all the observations and findings of the respected Supreme Court of Pakistan were given when deciding the issue that the return on capital paid by a company to assessee on the holding as the latter in the share capital of the former. was not "dividend" ,within the meaning of the definition given in section 2(6-A) of the Repealed Income Tax Act. We will also like to acknowledge that the learned A.R. of the assessee insisted that as far as the observation of the Supreme Court of Pakistan about the interpretation of statutes and the intervention by the Income Tax Department about mutually agreed transaction was concerned, they concerned with basic concepts of jurisprudence and these observations could not be limited to the case in hand decided by the Supreme Court of Pakistan. No doubt this assertion of the learned A.R. has legal force behind it but we will still like to say that when passing this judgment the issues of property evaluation under section 13 of the Income Tax Ordinance and the provisions of section 27-A of Stamp Act were not under consideration. Here we will like to refer to the observation of the respected Supreme Court about interpretation of statutes. It has been very clearly laid down at page 493 H that Courts are bound to apply Islamic Rules of Interpretation, unless excluded otherwise, in preference to the contrary so called accepted rules of interpretation under the other jurisprudential concepts and the fiscal laws ire no exception in that behalf. It was further laid down that on the touchstone of Islamic Rule of Interpretation, which unless excluded otherwise under the present Constitutional set up, the Courts are bound to apply in preference to contrary rules of Islamic interpretation and the fiscal laws are no exception in this behalf. These observations of the respected Supreme Court which have to be respected as the ultimate authoritative opinion of the highest Court in Pakistan are binding on the subordinate Courts which are bound to apply Islamic Rules of interpretation unless excluded otherwise under the present Constitutional set up. Here the provisions of section 13 of Income Tax Ordinance have been specifically introduced by the legislature to safeguard the interest of revenue in case of unexplained investment. The provision of the section specifically gave the power to the I.T.O. that if the explanation given by the assessee is not satisfactory in the opinion of the I.T.O. the amount invested and not explained properly has to be taken as to be deemed income of the assessee. In this regard provisions of section 13(2) have to be read very carefully wherein it has been provided that ii the investment made as shown by the assessee is too low, the I.T.O. can determine, after giving reasonable opportunity to the assessee of being heard and with the prior approval of the I.A.C., a reasonable value and the difference between this reasonable value and the amount declared as invested has to be assessed as deemed income under subsection (1) of section 13. So, the conditional ties laid down for any addition to be made under section 13(2) read with section 13(1), are:---

(1) The value of investment declared is too low.

(2) If the I.T.O. thinks that the value declared is too low then he gets the approval of the IA.C. before confronting the assessee. This which has been deliberately made mandatory to ensure that no high handedness is involved as far as I.T.O. is concerned; and

(3) The explanation given by the assessee is not satisfactory.

This is specific provision and under the present existing Constitutional set up it has to be applied and interpreted according to the principles of interpretation of statute. Even if it is claimed that this provision is in contravention of the' Islamic Jurisprudence concepts income tax Appellate Tribunal is not competent to give any finding on that issue. As far as the Income Tax Appellate Tribunal is concerned it has to interpret the provision of a given section in Income Tax Ordinance as laid down in that provision 'i particularly when there is no confusion about them and the words used are very clear. Here in this case the assessee had definitely shown the investment at too low a figure as compared to the value determined for the purposes of imposition of stamp duty. In the presence of this wide discrepancy between the value shown and the value adopted for stamp duty purposes we are of the view that opinion held by the LTO that it was too .low is amply justified and he could take resort to provision of section 13(2) read with section 13(1) of the Income Tax Ordinance. Another argument was taken by the learned A.R. of the assessee that declared value should have been accepted because the department had raised no questions in its case of the seller. We will like to convey our opinion that additions for unexplained investment as envisaged under section 13(1)(d) are applicable to purchasers. None of the provisions of section 13 is applicable to a seller. So, there was no question of any enquiries to be made from the seller about the reasonableness of the sale price declared as far as the proceedings in the case of the seller under Income Tax Ordinance are concerned. At the most a competent Wealth Tax Officer is expected to keep its aspect of the matter in view when passing wealth tax order, if any, in case of the matter of fact a more rational approach in such cases is to consider the value fixed by the District Authorities on a particular date and take the escalated or de-escalated value of the property keeping in view the fact whether the prices of real estate were rising during the intervening period or falling. Simultaneously special features of the property have also to be kept in view. Here the I.T.O. had adopted the value determined by the District Authorities whereas the learned C.I.T.(A) had reduced it keeping in view the peculiar features of the property in question. This peculiar feature was that it is a very old building with old tenants some of which were in litigation with the previous owners and were still in litigation with the assessee. In the case of the property with such attached disadvantages, the value at which it can be purchased can be lower than the value fixed by the District Authorities. This fact has been kept in mind by the learned C.I.T.(A) when giving relief. We are of the view that the approach of the learned C.I.T.(A) was very realistic and in accordance with the spirit of section 13(2). As far as the value adopted by the learned C.I.T.(A) was concerned the learned D.R. was of the view that the relief granted was not justified and if at all justified the same was rather on the higher side. We have already observed that the lower value can be taken under section 13(2) than the value fixed by - the District Authorities when there are certain disadvantages or encumbrances attached to the properties. So, the claim of the D.R. that the value adopted by the District Authorities be restored is hereby rejected. We are also of the view that the relief given by the learned C.I.T.(A) is amply justified and calls for no interference.

7. So, the objections of both the assessee and the department against the value fixed by the learned C.I.T.(A) are hereby dismissed.

8. We will also like to refer to the concept of a "genuine contract" and "genuine consideration". It is an unfortunate reality that quite a few people were not showing the correct prices for which the properties were purchased. The provision 'of section 13 of the Income Tax Ordinance were deliberately introduced to bring into tax net the unexplained investment but it did not debar the I.T.O. from accepting the declared values if there was a "genuine contract" and a "genuine consideration" has been paid for same. This is why conditional ties were attached to application of section 13(2) that before making any such addition the I.T.O. is not only to get prior approval of the IA.C. but also give an opportunity to assessee to explain the investment. Addition under section 13 is envisaged only if no satisfactory explanation is given.

9. Next objection has been raised against the adoption of GP rate at 10% and sales at Rs 24,00,000 by the learned C.I.T.(A).

10. Trading account results for the period under consideration are as under:---

	Declared	I.T.O	C.I.T(A)
Sales	22,42,627	25,00,000	24,00,000
G.P. rate	15.8%	19%	18%

10. It was claimed by the learned A.R. of the assessee that all the purchases including imports and local purchasers were verifiable and so when estimating sales Dandekar Formula should have been applied. The I.T.O. has mentioned in his order that the sales are unverifiable and stock tallies are not available and no stock register has been maintained. G.P. rate declared has also been mentioned as to be on the lower side. Absence of stock register and stock tally means that the goods purchased cannot be co-related with goods i sold. In such circumstances the Dandekar Formula cannot be applied unless quantitative tally is given showing all the purchases and sales. Such a tally was not given to the I.T.O. Under the circumstances the trading account results have rightly been rejected and Dandekar' s Formula not applied. The estimate of sales is confirmed being reasonable. All the same the G.P. rate applied is somewhat on the higher side. The same is reduced to 17.5%.

11. This disposes of both the appeals of the department and the assessee against order passed under section 62 of the Income Tax Ordinance for the assessment year 1988-89.

Order under section 111 Assessment year 1988-89.

12. The learned A.R. of the assessee maintained that even if an addition is made by the I.T.O. based on values fixed by District Authorities under the Stamp Act alongwith other factor no penalty for concealment can be applied because it is a question of only an estimate. It is hereby clarified that the I.T.O. had made the addition under section 13(1)(d) by adopting values circulated by the District Authorities but the learned C.I.T.(A) had reduced the sane because of special disadvantages associated with the property purchased. There was no dispute about the fact that as far as the provisions of section 111 are concerned penalty for concealment could be imposed under section 111(2)(c). It was emphatically asserted by the learned A.R. that although the wording was such that penalty for concealment could be imposed for any addition made under section 13(1)(aa) (b), (c), (d) and (e) of subsection (1) of section 13 yet the very concept of concealment of income or furnishing inaccurate particulars of income including deemed income means that the addition made is not just based on estimates but there is positive evidence of this concealment depending on the facts of the case or the circumstantial evidence. In support of this contention the learned A.R. referred to Circular No.-(1) DT.14 f 91 dated 28-4-1991 of the Central Board of Revenue. It was argued that it was crystal clear from the regarding of the circular that penalty for concealment could not be imposed when the addition made is just based on estimate. The circular referred to is reproduced as under for ready reference.

"Section 13 of the Income Tax Ordinance, 1979 provided for additions, as deemed income, of unexplained investment, etc. Subsection (2) of the section empowers the Department to determine the value of investment, etc. where it is understated. An amendment in section 111 made in 1984, brought additions under section 13(1), except clause (a), within the ambit of the definition of concealment question arisen as to whether a penalty under section 111 can be levied in respect of addition made under section 13(2).

Proceedings under section 111 are of penal nature and the onus of proof that the assessee has concealed his income lies on the department. Thus,, the department must be in possession of such evidence as would convince a reasonable minded person that the assessee has concealed his income by consciously misstating the facts.

Mere differences of opinion between the I.T.O. and the assessee is not sufficient evidence for levy of penalty.

In this view of the matter, no penalty is leviable under section 111 in respect of additions made under section 13(2) unless evidence is available with the department that the value of the investment of article etc. or the expenditure incurred has been understated or the value shown is penalty perverse for example in the case of purchase of property, the department comes into possession of the agreement of sale showing an amount higher than the amount shown in the deed or in case of construction of property there is a contract between the assessee and the contractor which shows the cost higher than that shown by the assessee. Penalty can also be levied in cases where the cost of a property shown is much lower than the value fixed by the Registration Authority for the levy of registration fee and the assessee has paid the prescribed fee, etc. These examples are only illustrative and not exhaustive.

The principle, as stated above is that there should exist independent 'direct evidence that the value has been understated.

In view of the foregoing, I am directed to say that action under section 111 should be taken in respect of addition made under section 13(2) only where the stated conditions are adequately met."

From the above it is very clear that this circular distinguishes between cases where valuation has been made on estimates keeping in view the evidence which could justify the adoption of such estimates but which did not have enough evidential value to establish that the addition made was based on solid irrefutable facts supported by any known figures resulting in concealment of income. Here in this case the I.T.O. relied on the values fixed by District Authorities and further relief was given by the learned C.I.T.(A) for such essential facts as that the building was very old, most of the old tenants continued to occupy the building etc. So, the basis adopted by the I.T.O. is based on certain figures which have been prepared by an authority having specialized knowledge about the transactions involved in the case of real estate transfers. The value circulated by the District Authorities are not in vacuum. They are based on solid field work. So, one can say that there was a solid base available with the I.T.O. when making addition under section 13(1)(d). Actually the circular quoted is against the assessee because it has been clarified in the underlined part of circular that when the additions have been made based on the figures circulated for Stamp Act purposes and such duty has been paid then penalty for concealment has to be imposed. In the appeal order against penalty the learned C.I.T.(A) has remitted back the case to the I.T.O. for recomdutation of penalty to be imposed in the light of his appeal order dated 26-3-1990. As the valuation as per that appeal order has been confirmed by us when disposing of the appeal under section 62 the remitting back of the order under section 111 to the I.T.O. by the learned C.I.T.(A) for recomdutation calls for no interference.

13. Consequently this appeal stands rejected.

MUHAMMAD MUJIBULLAH SIDDIQUI (JUDICIAL MEMBER).---I agree. I have had the advantage of reading the judgment proposed to be delivered by my learned brother . Mr. Nasim Sabir Syed, the Accountant Member. I, however, wish to express my conclusions on some of the points urged before us in these appeals. The relevant facts have already been narrated by my learned brother and, therefore, I would not like to burden this order by repeating the facts. I would like to concentrate mainly on the issue whether the value circulated by Collector under section 27-A of the Stamp Act can be made a basis for the valuation of a property while determining the value of investment made by an assessee under section 13 of the Income-tax Ordinance, 1979. The learned counsel for the assessee has submitted that the consideration shown in the Conveyance Deed should be accepted and the Income Tax Officer has no authority to adopt enhanced value by determining the market value of the property. Mr. Sirajul Haq has contended that in view of the observation of Hon'ble Supreme Court of Pakistan in the case of C.I.T. v. Siemen A.G. 1991 PTD 488 the Income Tax Authorities cannot intervene in a freely concluded contract. He has invited our attention to the following observations of the Honourable Supreme Court of Pakistan:--

"The most important relevant injunctions of the Quran are contained amongst other in Chapter Maida Verse (1) and Chapter Alisara' s Versa (34)---to the effect that the contracting parties are bound to fulfil their contracts. And that they would remain liable for any contraventions---obviously both here and hereafter. There are very strong Commands and have been enforced in various legal fields. Recently a major contravention regarding the law of pre-emption was resolved by the Supreme Court and this principle was also applied - See the case of Said Kamal Shah PLD 1986 Supreme Court 360 at 381 and 418 et seq. What was emphasized regarding prohibition against third party intervention in mutual contracts in the well-established sunnah injunction is that: People be left alone in their mutually agreed transactions; so that they be blessed by Allah through free circulation of (Wealth) amongst themselves' (Bokhari Kitabul-Baua No.3709; Abu Daud; Kitabul-Ajara No.3442). When parties by mutual free consent enter into a valid contract, then the third parties have no right to intervene either to frustrate the contract or to change its nature- (Government of N.-W.F.P. v. Said Kamal Shah PLD 1986 SC 360."

2. Mr. Sirajul Haq has further submitted that after the clear observations of Hon'ble Supreme Court of Pakistan the laws are to be interpreted in accordance with the Islamic principles of interpretation and according to Mr. Sirajul Haq under the Islamic principles of jurisprudence any third party (including government functionaries and the revenue authorities) have no authority to change the terms and conditions of a contract mutually agreed between two parties. In principle I agree with the contention of Mr. Sirajul Haq and respectfully following the dictums laid down by the Hon'ble Supreme Court of Pakistan I would like to examine if section 13 of the Income-tax Ordinance, 1979 and section 27-A of the Stamp Act contravene any of the principles of Islamic jurisprudence and whether the Income Tax Officer can adopt the valuation circulated by Collector under section 27-A of the Stamp Act for the purpose of estimating the investment in any property without doing any violence to any of the provisions of the Islamic jurisprudence. For the sake of convenience section 13 of the Income-tax Ordinance, 1979 is reproduced below:--

"13. Unexplained investments, etc., deemed to be income.---(1) Where, in the course of any proceedings under this Ordinance

(a) any sum is found to be credited in the books of any assesseemaintained for any income year; or

(aa) the assessee is found to have made any investment or is found to be the owner of any money or valuable article, in any year; or

(b) the assessee is found to have made any investment in any income year which is not recorded in the books of account maintained for that income year or is not shown in the wealth statement furnished under section 58 in respect of that year; or

(c) the assessee is found in respect of any income year to be the owner of any money or valuable article which is not recorded in the books of account, if any, maintained by him or is not shown by him in any wealth statement furnished under section 58 in respect of that year; or

(d) the assessee has made investment in any income year or is found in respect of any such year to be the owner of any valuable article and the Income Tax Officer finds that the amount expended on making such investment or in acquiring such valuable article exceeds the amount recorded in this behalf in the books of account maintained by him or shown in the wealth statement furnished under section 58 in respect of that year; or .

(e) an assessee has, during any income year, incurred any expenditure, and the assessee offers no explanation about the nature and source of such sum, investment, acquisition of the money or valuable article, excess amount or the money from which the expenditure was met, as the case may be, or the explanation offered by him is not in the opinion of the Income Tax Officer satisfactory, the sum so credited, the value of the investment, the money or the value of the article the excess amount or the amount of the expenditure, as the case may be, shall be deemed to be the income of the assessee of such income year chargeable to tax under this Ordinance:

Provided that in cases referred to in clauses (aa) to (e) such income shall not be chargeable to tax unless prior approval of the Inspecting Assistant Commissioner has been obtained.

(2) Where the value of any investment or article referred to in clause (aa), (b). (c) or (d), or the amount of expenditure referred to in clause (e) of subsection (1) is, in the opinion of the Income Tax Officer, too low, the Income Tax Officer may determine, after giving a reasonable opportunity to the assessee of being heard and with the prior approval of the Inspecting Assistant Commissioner, a reasonable value of the amount thereof, as the case may be, and all the provisions of subsection (1) shall have effect accordingly."

3. The learned Accountant Member has already dealt with the purport of section 13. He has very ably analysed the purpose of enactment and the authority vested in the Income Tax Officer to determine the reasonable value of any investment made if the declared value is found to be too low. The legislature in its own wisdom has not provided any hard and fast rule in the Income Tax Ordinance for determining the reasonable value of the investment and has left it to the discretion of Income Tax Officer to determine the value according to the requirements of each case on its own merits and in accordance with the requirements of the circumstances prevailing in each case. Thus, various options are open to the Income Tax Officer for determining the reasonable value of the investment. The Assessing Officer can determine the reasonable value of the investment by bringing evidence about the market value of a property in which investment is made by showing the value of properties in the same locality prevailing during the same period. One of the modes of doing so is to examine the value of properties sold in the same locality or vicinity during the same period. For this purpose the Assessing Officer can look into the Conveyance Deeds registered with the Registrar under the Registration Act. Under the provisions of section 54 of the Transfer of Property Act, 1882 a tangible immovable property of the value of one hundred rupees and upwards can be made only by a registered instrument. Under section 3 of the Stamp Act, 1899 every instrument shall be chargeable with the stamp duty according to Schedule 1 of the Stamp Act. Under Article 23 of the First Schedule to the Stamp Act the amount of stamp duty to be charged is provided. The Stamp Duty under this Article is to be charged on the amount or value of the consideration for such conveyance as set forth therein. For the purpose of ascertaining the true consideration, section 27 of the Stamp Act was enacted which reads as follows:--

"27. Facts affecting duty to be set forth in instrument.---The consideration (if any) and all other facts and circumstances affecting the charge ability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein:"

4. A perusal of above section shows that a confidence was reposed, in the buyer whose duty is to prepare a conveyance, tender to the seller for its execution and get it registered, to incorporate the true consideration in the conveyance deed. However, the omission to state the consideration correctly was not to operate as invalidation of the- instrument. Any person contravening the requirement of section 27 of the Stamp Act with intent to defraud the Government was made liable to the imposition of penalty under section 64 of the Stamp Act which reads as follows:--

"64: Penalty for omission to comply with provisions of section 27.-- Any person who with intent to defraud the Government,---

(a) executes any instrument in which all the facts and circumstances required by section 27 to be set forth in such instrument are not fully and truly set forth; or

(b) being employed or concerned in or about the preparation of any instrument neglects or omits fully and truly to set forth therein all such facts and circumstances; or

(c) does any other act calculated to deprive the Government of any duty or penalty under this Act;

shall be punishable with fine which may extend to five thousand rupees."

5. Thus, initially the legislature deemed it sufficient to make provision for imposition of penalty in case of defrauding the Government by any person calculating to deprive the Government of stamp duty. At this stage I would like to observe that under the prevailing legal system the conveyance deed is the basic document of title in respect of an immovable property above the value of one hundred rupees, which is required to be duly stamped under the Stamp Act and registered with the Registrar/Sub-Registrar under the Registration Act. Thus, the consideration shown in the Conveyance Deed and accepted by the Registrar while registering the document was prima facie deemed to be correct consideration of the property, normally for all intents and purposes including the collection or revenue by all the Federal and Provincial authorities until and unless proved to be otherwise. The duty cast on a buyer under section 27 of the Stamp Act and the mechanism provided in other provisions of the Stamp Act including the provision contained in section 64 were deemed sufficient to attach the presumption of truth to the consideration shown in the Conveyance Deed. However, with the passage of time and extraordinary escalation in the prices of real estate (immovable properties) it was found that the original provisions contained in the Stamp Act were not sufficient to curb the tendency on the part of buyers and sellers in suppressing the real consideration of the properties, more particularly in urban areas. One of the main consideration for suppression of real consideration was the tendency to avoid the payment of duties levied under the various acts such as Stamp Duty and to save from further consequences under various Acts such as Income Tax Law. In order to safeguard the State revenue an amendment was made in the province of Sindh by Sindh Finance Act, 1986 and section 27-A was inserted which reads as follows:--

"27-A. Valuation of urban immovable property.---Where any instrument is chargeable with ad valorem duty under Article 23 or Article 31 of Schedule 1, the value of the property involved shall be calculated according to the valuation table notified by the Collector in respect of properties situated in particular area or locality:

Provided that where the value given in the valuation table, when applied to any property, appears to be excessive, the Commissioner may, on application made to him by the aggrieved person, determine its correct value and for that purpose the provisions of section 31 and section 32 shall apply mutatis mutandis.

In Schedule I, Article 23, was also substituted as under:

23. Conveyance as defined by section 2(10) not being a Transfer charged or exempted under No.62--

(a) In case of immovable property in an urban area other than agricultural land or land used for purposes subservient to agriculture.	Eight rupees for every one hundred rupees or part thereof, of the value of the property.
(b) In any other case	Six rupees for every one hundred rupees or part thereof, of the value of the property.

Explanation.--For the purposes of clause (a) "urban area" means--

(i) an area specified by Government under section 3 of the Sindh Urban Immovable Property Tax Act, 1958; or

(ii) any built up area together with the land appurtenant thereto or the area occupied as a building site or enclosure and notified by Government to be an urban area:'

6. In order to ascertain the true import of above amendment it would be appropriate to reproduce the original Article 23 of Schedule 1 for the purpose of comparison. The original Article 23 reads as follows:--

"23. Conveyance as defined by section 2(10) not being a Transfer charged or exempted under No.62--

Where the amount or value of two rupees the consideration for such conveyance as set forth therein does not exceed Rs.40.

Where it exceeds Rs.50 but Four rupees does not exceed Rs.100.

Where it exceeds Rs.100 but Eight rupees does not exceed Rs.200.

Where it exceeds Rs.200 but Twelve rupees does not exceed Rs.300.

Where it exceeds Rs. 300 but Sixteen rupees does not exceed Rs.400.

Where it exceeds Rs.400 but Twenty rupees does not exceed Rs.160.

Where it exceeds Rs.100 but Twenty four rupees does not exceeds Rs.600.

Where it exceeds Rs.600 but Twenty-eight rupees does not exceed Rs.700.

Where it exceeds Rs.800 but Thirty-two rupees does not exceed Rs.800.

Where it exceeds Rs.800 but Thirty-six rupees does not exceed Rs.900.

Where it exceeds Rs.900 but Forty rupees does not exceed Rs.1,000 and for every Rs.300 or part thereof in excess of Rs.1,000 Twenty rupees:'

7. A comparison of the original Article 23 of the Schedule 1 to the Stamp Act and the amendment introduced by Finance Act, 1986 in Article 23 shows that in the original Article 23 the stamp duty was to be charged on the value of consideration set forth in the Conveyance Deed while under the amended provision the stamp duty was to be charged on the value of property and the value of property shall be calculated according to the valuation table notified by the Collector. in respect of properties situated in a particular area or locality. It is further provided in the amended Article for the protection of aggrieved party that if the value given in the valuation table when applied to a property appears to be excessive the Commissioner may on application made to him by aggrieved person, determine its correct value and for that purpose the provision of section 31 and section 32 of the Stamp Act shall apply mutatis mutandis. Sections 31 and 32 of the Stamp Act are reproduced below:--

"31. Adjudication as to proper stamp.---(1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays fee of such amount (not exceeding five rupees and not less than eight annas as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.

(2) For this purpose the Collector may require to be furnished with are abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or-the amount of the duty with which it is chargeable, are fully and truly set forth therein and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly:

Provided that--

(a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an enquiry as to the duty with which the instrument to which it relates is chargeable; and

(b) every person by whom any such evidence is furnished shall on payment of the full duty with which the instrument to which it relates is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid."

32. "Certificate by Collector: --(1) When an instrument brought to the Collector under section 31, is in his opinion, one of a description chargeable with duty and --

(a) the Collector determines that it is already fully stamped, or

(b) the duty determined by the Collector under section 31 or such a sum as, with the duty already paid in respect of the instrument, is equal to the duty so determined has been paid, the Collector shall certify by endorsement on such instrument that the full duty (stating the amount) with which it is chargeable has been paid.

(2) When such instrument is, in his opinion, not chargeable with duty, the Collector shall certify in manner aforesaid that such instrument is not so chargeable.

(3) Any instrument upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be and if chargeable with duty, shall be receivable in evidence or otherwise, and may be acted upon and registered as if it had been originally duly stamped:

Provided that nothing in this section shall authorise the Collector to endorse--

(a) any instrument executed or first executed in (Pakistan) and brought to him after the expiration of one month from the date of its execution or first execution, as the case may be;

(b) any instrument executed or first executed out of (Pakistan) and brought to him after the expiration of three months after it has been first received in (Pakistan); or

(c) any instrument chargeable with the duty of one anna (or half an anna) or any bill of exchange or promissory note when brought to him, after the drawing or execution thereof, on paper not duly stamped:'

8. An analysis of the various provisions contained in the Stamp Act and the effect of insertion of section 27-A in the Stamp Act by Sindh Finance Act, 1986 and the amendment or Article 23 of the Schedule 1 of the Stamp Act, 1899 shows that after the 1st day of July, 1986 the valuation of all the immovable properties for the purpose of stamp duty shall be taken according to the value given in the valuation table notified by the Collector notwithstanding any-lesser consideration shown in the Conveyance Deed. It means that the legislature in its own wisdom (which cannot be challenged at least in this forum) in order to protect the State revenue, in the background of generally prevalent tendency of suppressing the correct value of properties has enacted a deeming provision whereby the values of properties have been fixed notwithstanding the lesser valuation shown in the Conveyance Deeds. As already observed the declaration of incorrect valuation of the property under section 27 of the Stamp Act had not the effect of making the transaction void and the same consequences continue to accrue even after the insertion of section 27-A by Sindh Finance Act, 1986. Thus, the amendment made in the Stamp Act does not lead to any consequence which may bring the same under any of the situations described by the Honourable Supreme Court of Pakistan. The Honourable Supreme Court of Pakistan in the case of C.I.T. v. Siemens A.G. (supra) has observed that the Income Tax Authorities cannot change the nature of contract intended by the parties thereto, under the pretext that the rule of interpretation of fiscal law in this behalf is different. The Honourable Supreme Court has further observed that as far as contracts are concerned, there is prohibition against third party intervention in mutual contract. People be left alone in their mutually agreed transaction so that they be blessed by Allah through free circulation of wealth among themselves and that, "when parties by mutual free consent enter into a valid contract, then the third party would have no right to intervene either to frustrate the contract or to change its nature".

9. The above observations were made by the Hon'ble Supreme Court of Pakistan in the facts and circumstances of the case under consideration. The facts of the cited case where that the assessee showed in its return a sum of Rs.4,39,769 as income from dividend. The Income Tax Officer held that this amount was interest and not dividend. The assessee preferred appeal before the Tribunal which failed but on Income-tax Reference before High Court the point of view of the assessee was upheld. Leave to appeal was granted to the Department by the Hon'ble Supreme Court of Pakistan and while confirming the judgment of Hon'ble High Court it was held by the Honourable Supreme Court of Pakistan that according to Islamic rule of interpretation the fundamental principle is established that two contracting parties agreed to do something by a mutual valid contract or intend doing so and it is not prohibited by Islam, a third party like the Income-tax Department or for that matter the Court has no power to modify either the contract or with what they intended to do with it. It will be seen that in the cited case the two parties had agreed for a return of 5% on the investment has dividend while the Income Tax .Officer held the amount to be interest. Thus, the nature of contract was modified and changed by the Income Tax Officer which has not been approved by the Honourable Supreme Court of Pakistan. In the present case under consideration before us the nature of contract is neither modified nor amended. What the Income Tax Officer has done is that he has found that the appellant in its Balance Sheet as on 30-6-1988 declared total value of the Building MR/1/64 at Rs.9,66,900 for the first time. He examined the conveyance deed and found that in the conveyance deed the lump sum consideration was written as Rs.7,00,000. The conveyance deed was registered with the Sub-Registrar E Division 1, Karachi. The concluding paragraph of the conveyance deed read as under:--

"The built up area of the ground floor is 420 sq. yds. consisting of shops, commercial value at Rs.9,45,000. First floor, second floor, third floor, having covered area of 11340 sq. fit. and 4th floor having covered 200 sq. ft. Total covered area of 11540 sq. ft. valuing at Rs.20,19,500 total valuing at Rs.29,64,500 for the purpose of stamp duty of Rs.2,37,200 is paid."

10. The Assessing Officer observed that "the value of property determined by Sub-Registrar is a substantial proof and a sufficient base of valuation of the building for income-tax purposes." He thereafter confronted the appellant after completing all the legal formalities and adopted the. value as determined by the. Sub-Registrar and made the addition accordingly. The learned C.I.T. (A) confirmed the method of valuing the property but allowed further relief in peculiar circumstances and facts. My learned brother, the Accountant Member has dealt with this aspect of the case and I need not to give the further details. I want to demonstrate only that the Income Tax Officer has neither changed the nature of contract nor has intervened to modify or frustrate the contract. Likewise, the Sub-Registrar has also left the contract intact except that for the purpose of stamp duty the valuation has been adopted in accordance with the provisions contained in Section 27-A of the Stamp Act. Thus, both the revenue collecting agencies have accept the contract and without frustrating the contract have adopted valuation of the property for the purpose of collecting the State revenue in accordance with the provision contained in section 27-A of the Stamp Act. The appellant who purchased this property conceded to the valuation of property by the Sub-Registrar in accordance with the provisions contained in section 27-A as he did not submit any application to the Commissioner for determining the correct value under the provisions of sections 31 and 32 of the Stamp Act. It is, therefore, held that the treatment given by the Income Tax Authorities does not come within the prohibitions which have been referred by the Hon'ble Supreme Court of Pakistan in the case of C.I.T. v. Sieman A.G. (supra).

11. Now I proceed to examine the issue relating to the other principle laid down by the Honourable Supreme Court of Pakistan in the case of C.1.T. v. Sieman A.G. The Honourable Supreme Court of Pakistan has held that in the case of fiscal statutes Courts are bound to apply Islamic rules of interpretation unless excluded otherwise in preference to the contrary. The Hon'ble Supreme Court has further observed that on the touchstone of Islamic rules of interpretation, which unless excluded otherwise, under the present Constitutional set up the Courts are bound to apply in preference to the contrary, so-called accepted rules of interpretation under the other jurisprudential concepts, and the fiscal laws are exception in this behalf. The learned Accountant Member has dealt with this aspect of the issue and I would like to support his findings in my own humble way. There are various enactments for the time being in force under which the authorities concerned are required to evaluate the correct market value of the properties for the purpose of collecting the state revenue. For example, under section 27-A of the Stamp Act the registration authorities are required to adopt value of .the property in accordance with the valuation table issued by the Collector. Under section 13 of the Income-tax Ordinance, 1979 the Income Tax Officer is required to determine the reasonable value of a property if the declared value is too low. Under Rule 8(3) of the Wealth-tax Rules, 1963 the Wealth Tax Officer is required to estimate the value of land and buildings with due regard J to the nature and size of the property, the amenities available and the price prevailing for similar property in the same locality or in the neighbourhood of the said locality. (There are other laws as well and I do not intend to give an exhaustive list of said laws in this order). In all such provisions the revenue collecting authorities are empowered to ignore the declared values of the properties and the question for consideration is whether under the Islamic jurisprudence any law can be enacted whereby the State functionaries are authorised to ignore the declared or contracted value of the properties and adopt their own valuation for the purpose of taxation/revenue collection without declaring the contracts void or frustrating or modifying the contract as between the two contracting parties for the limited purposes of revenue collection.

12. For the above purpose the sources, nature and characteristics of Islamic law in accordance with the Islamic jurisprudence (sual-Fiqa) is to be examined. The jurists have generally described four, sources of Islamic law only to wit, (1) Quran (2) Sunnah (3) Ijma and (4) Qias. In fact these are not the only sources of Islamic laws and there are other sources as well. The sources of Islamic Shariah enumerated above are the fundamental sources and the first two Quran and Sunnah are the prime sources. However, there are other sources which may be termed as subordinate sources. Some of the subordinate sources are Maaroof Maslehat/ Masalah-e-Mursalan/Istheean/Istadlal etc. Dr. Sabhi Mehmasani, Professor of Law in Beirut University and President of Appellate Court Beirut in his Treaties Falsafa-e-Shariatul Islam has categorised the sources of Islamic Law in internal sources and external sources. The Quran Sunnah, 1jma, Qias, Ijthead, Istheean, Masalah-e-Mursalah etc. have been classified as internal sources while legislation by this State Maaroof, customs and usages have been categorised as external sources. The learned Author has dealt with the principle of change in law with the change m. circumstances under the Islamic jurisprudence. In the Urdu translation of Treatise under the title "Falsafa-e-Shariat-e-Islam" by Moulvi Muhammad Ahmed Rizvi published by Majlis-e-Taraqqi-e-Adab, Lahore, he has cited the opinion of Ibnie Qayyam at page 243 as follows:--

"The change in law is dependent on the change of time and space, circumstances and intents, as well as habits of human beings."

He has further referred to a maxim in this. behalf which is as follows:

(It cannot be denied that the law is changed with the change in circumstances)

He has further proposed the following addition.

(Laws are changed with the change of time and circumstances).'

13. The jurists have given various examples whereby changes have been affected such as the rule of inalienability, of waqf properties. Imam Abu Hanifa favoured alienability according to time and circumstances but when selfish men started to misuse the dedicated property they decided to adopt the rule of perpetuity. Another illustration is found in Baybilwafa it is a sale on condition that when vendor will pay back the price the purchaser will return the land. The sale is illegal because of the illegal motive. The motive being to legalize usury and because of the vitiating condition no sale could be allowed. However, the sale was allowed looking to the requirements of the people. The third illustration is found in the Tazkiyat-al-Shahud. This principle was not practised during the life time of Holy Prophet and during the period of Khulfa-e-Rashideen. The letter written by Hazrat Umer (RA) to Abu Moosa Ashari (RA) contains that all Muslims are acceptable as witnesses against each other. The relevant part is reproduced below:--

"All Muslims are acceptable as witnesses against each other, exceptsuch as have received punishment (stripes) provided for by the religious law, such as are proved to have given witness, and such as are suspected (of partiality) on (the ground of) client's status or relationship, for God, praised be, He, forgives because of oath and postpones (punishment), in face of. evidence."

14. The purgation in the character of witnesses was introduced by the Great Oadi Shuriah who was appointed as Oazi by Hazrat Umer (RA) and was elevated to the post of Chief Justice (Qazi-al-Quzzat) by Hazrat Ali (RA). When asked as to why he introduced a new provision, he replied that as the people have changed themselves, therefore, he has also changed the procedure. Dr. Sabhi Mehmasani while dealing with the external sources of Islamic law in Chapter 4, Part III of his Book "Falsafa-e-Shariat-Islam" has observed that the reason of law-making by the monarchs was that when no clear injunction was found in Quran and Sunnah the laws were enacted particularly in relation to the administrative functions of the State such as establishment of various departments, assessment and collection of revenues, collection of Kharaj, organization of prisons, appointment of Mohtasib etc. In the present age the powers of monarchs are vested in the legislatures.

15. Dealing with the maxim another renowned scholar Mustafa Ahmad Al-Zaraq has observed that there is consensus that only those laws can be changed which are based on ijthead and in which the basis of ijthead is Maslehat of Umma. He has observed that no change can be allowed in such basic laws which are based on the clear injunctions of Quran and Sunnah such as marriage with the persons in prohibited degree, free consent of the parties in business transactions binding nature of freely concluded contracts etc. He has observed that the change in Shariah laws are allowed in two conditions only. The first is the deterioration in morals as piety, faith which is normally called as "fased-e-zamana". The other is that with the development in civilization and culture new organization, set ups, rules and regulations are required and to cope up with the new economic problems new methods are required to be adopted. The learned author has given various examples of change in law as follows:--

(i) It was an accepted principle of Hanafi Fiqh that the responsibility of the payment of loan was on the debtor and charge was not created on his property. Thus, a debtor could dispose of his property in any manner or could create a waqf to the extent that nothing was left for payment of loan. When the people started misusing the rule the jurists gave fatwa that the debtor could create waqf to the extent which was in excess of the debt liability. Muhammad Ibne Muhammad Alamadi Abu Saeed. Mufti of Turkey and Judge of Constantinople, got a decree issued in this behalf-by the King. Not only the waqf created for defrauding the lenders was declared void but sale and gift was also declared to be void.

(ii) It is provided in Hanafi Fiqh that if husband pays prompt dower to his wife he can take her anywhere he likes. However, when it was found subsequently that while taking away the wife to far off places where none of the relatives of wife were available the husband started cruelty on wife and started abusing their rights, fatwa was given that a husband could not compel his wife even after payment of prompt dower to take her from her native place or from the place where marriage was performed to far off places.

(iii) There is principle of Hanafi Fiqh that Oazi can decide the cases on the basis of his personal knowledge. However, when subsequently it was found that the same piety and integrity was not found in the Qazis and the appointments were being made for the considerations other than integrity piety and efficiency it was held that the Qazi was not authorised to decide the cases on the basis of personal knowledge.

(iv) It was an established principle with jurists that according to the law of evidence it was condition precedent that the witness should be Adil. Subsequently, it was found that the quality of Adil as required under Shariah was found in very few people and if the Courts required the same standard of witnesses the litigants would be deprived of their rights and consequently the principle of comparative Adil was accepted. (See Islam Ka Nizam-e-Qanoon, compiled by Ghulam Ali).

15-A. Dealing with the subject Maulana Muhammad Taqi Amini in his treatise "Fiqh-e-Islami Ka Tarikhi Pas Manzar" 5th Edition has observed at page 320, that for achieving national and collective interest the individual and personal interest can be ignored. He has given the following examples:--

(i) If enemies of Islam at the time of war advance under the cover of Muslims and their children, it is admissible for the Muslim army to attack on the enemy even if some Muslims and their children are to be killed in the process.

(ii) If any wall or tree is bent towards thoroughfare causing damage and problems for the passers by it is necessary to correct the wrong even if in doing so the owner of wall or tree sustains loss.

(iii) If a debtor is imprisoned for non-payment of loan it is permissible to sell his property so that the lenders do not sustain loss.

(iv) When the traders generally increase the prices of commodities to the extent that general public feels difficulty it is permissible to fix the prices although in doing so loss is sustained by the traders.

(v) If the traders indulge in hoarding causing difficulty to the general public it is permissible to take over the stock and get it sold.

(vi) It is permissible to prevent a profession at market which causes inconvenience to the market people. For example, in a cloth market a shop of blacksmith can be removed in order to save the traders generally from inconvenience.

16. Dealing with the authority of State in respect of transactions viz-a-viz welfare. of public-at-large the learned author of Hidaya has observed that, "Imam Muhammad has opined that if Chief of Muslims apprehends death of citizens he can compel a hoarder to sell the grain and can order to receive the price as prevalent with such increase which is estimated to be taken normally." It is further observed in Hidaya that, "Qadoori has stated that when head of the State apprehends death of citizens he is authorised to take away the foots grains from the hoarders and distribute the same among the needy persons with the condition that whenever they get the food grain they will return the same quantity of grain and it has been stated that there is consensus that Qazi can sell the grain on behalf of hoarder without his consent if the hoarder refuses to obey the order." (See Urdu transaction of Hidaya Kitabul Bayoob page 190 published by Maktaba-e-Ashrafia, Raiwind, District Lahore Pakistan). It is further clarified by the learned author of Hidaya that when head of the State has. fixed the prices and goods are sold at lesser or higher prices the contract of sale shall remain valid and receiving of less or more price shall not make the transaction of sale as void.

17. From the above discussion it can be concluded that if a contract of sale has been concluded with free consent between two persons and the true price paid between the parties is not shown in the sale-deed the transaction of sale shall remain valid. Normally the transaction of sale is to be concluded with the free consent of the parties and no third party including the State should intervene to modify or frustrate the contract. In special circumstances and on the basis of general welfare of the people the State and its functionaries can intervene so much so that if the welfare of people so demands the goods can be sold without consent and even against the wishes of the owner and on a price which is found reasonable by the State. The State can take notice of general deterioration in the integrity, honesty and peity of the people at a given time and can enact laws to protect the rights of people at large. In order to protect the general welfare and interest of the people even if some loss is sustained by some individuals it can be ignored. The State is authorised to levy taxes and in doing so can enact the laws for estimating the reasonable value of the properties as prevailing at a particular time in a particular locality. When State is empowered to levy the taxes it is empowered to take all necessary acts in furtherance thereof without infringing the rights of individual parties, according to them under the freely concluded contracts/transactions and without doing any violence to any of the rights conferred on the individuals or any other person under Shariah. All Muslims are normally deemed to be good Muslims until and unless proved to be otherwise and they are required to enter in transaction between themselves truly and honestly without causing any loss to the State and public-at-large. For example, every Muslim is supposed to give true evidence. However, if State feels at any time that the instances of falsehood are increasing then necessary measures can be adopted for ascertaining the quality of Adil and Taqwa in the witnesses. At the same time, if the persons- of absolute Adil are not available then in order to protect the rights of people the persons of comparative; Adil shall be accepted as witnesses. It means that the spirit is always to prevail over the person and the necessary change in the law is permissible for safeguarding the general and collective interest of the State without infringing the individual rights managing from transactions in favour of the parties. It can be said that a balance is to be struck in the safeguarding of individual interests and rights granted under Shariah and the general and collective interest of the public-at-large and the State.

18. Applying above principles to the fact of the present case we find that originally the value of property as declared in the sale-deed was accepted as, in between the parties to the contract, as well as, for the purpose of state revenue. However, when the tendency of evasion of state revenue became rampant, the law was changed whereby the valuation of property for the purpose of stamp duty was taken in accordance with the value shown in the valuation table issued by the Collector and in order to safeguard the interest of buyers a provision was made for assailing the said valuation before Commissioner. However, the validity of contract between the parties remained intact. A similar provision was enacted under the Income Tax Ordinance whereby the Income Tax Officer was authorised to adopt the reasonable value of a property if the investment shown by an assessee was too low. Various safeguards were provided in order to protect the interest of assessees in this regard which I need not to dilate at this stage. As already observed when the State is empowered to levy a tax it is also empowered to make provision for collection of the real tax due. The cases of concealment of income, suppression of true facts and evasion of taxes are so numerous and glaring that no Government can remain oblivious of these facts. For this purpose various provisions have been enacted in different laws including the Income-tax Law. Confining to the facts of the present case it is held that the Income Tax Officer for the purpose of ascertaining reasonable value of a property for the purpose of determining the investment made by an assessee can adopt various measures including placing reliance on the valuation table issued by Collector under section 27-A of the Stamp Act and more particularly when an assessee making the investment has accepted the valuation of the same property for the purpose of another revenue generating act, to wit, Stamp Act, without raising any grievance and having recourse to the redress provided under the Stamp Act.

19. I have given my anxious consideration to the contention raised by Mr. Sirajul Haq and to the various principles contained in Islamic law. I have not found anything in the Islamic jurisprudence whereby the Income-tax authorities can be prevented from ascertaining the correct and true valuation of the property for the purpose of taxation and without frustrating contract between the parties. The impugned finding of the learned two officers below is, therefore, not open to any exception does not militate against any of the dictums laid down by the Hon'ble Supreme Court of Pakistan.

20. For the foregoing reasons I fully agree with the findings of my learned brother, the Accountant Member.

21. The appeals stand dismissed as directed by my learned brother Mr. Nasim Sabir Syed.

M.B.A./13/T.T. Appeals dismissed.